Volunteer Income Tax Assistance (VITA) Certification Practice Test

Can a U.S. citizen claim foreign income when calculating eligibility for the EIC?

1. Yes

2. No

The correct answer is: Yes

A U.S. citizen can claim foreign income when determining eligibility for the Earned Income Tax Credit (EIC) if that income is considered earned income. To qualify for the EIC, taxpayers must have earned income from work, which can include wages, salaries, and self-employment income generated abroad. The Internal Revenue Service (IRS) defines earned income as income that comes from working for someone else or running one's own business. Therefore, if a U.S. citizen is working abroad and earning income, that income may contribute to their eligibility for the EIC, provided they meet the other qualifications. However, it’s essential to remember that foreign earned income must be reported in U.S. dollars, and certain foreign income exclusions or deductions may impact the overall amount considered for the EIC calculation. In summary, since foreign earned income can be included as it meets the criteria of earned income, a U.S. citizen is allowed to use it when calculating eligibility for the EIC.